After initially surging on strong Q4 results, Bill.com (BILL, Financial) saw its shares drop significantly. The initial boost was due to a solid overall performance, including a new $300 million repurchase authorization. However, investor enthusiasm faded upon discovering weaknesses, particularly in BILL's FY25 EPS guidance, which was affected by planned investments for the year. A downgrade from Goldman Sachs also contributed to the decline.
- BILL's adjusted EPS fell by less than expected, down 3.4% year-over-year to $0.57, beating estimates. Revenue grew 16.1% to $343.67 million, surpassing both analyst and company forecasts. The company added 4,600 net new customers in its direct and accounting channels, and 6,700 new customers in its financial institution channel. Total payment volume increased 10% year-over-year to $76 billion.
- These positive results reflected BILL's successful initiatives during FY24 to combat cyclical headwinds affecting B2B spending and payment method preferences. The company focused on adapting its go-to-market strategies, enhancing product experiences, and improving partner collaboration. These efforts led to better customer acquisition and stabilized payment monetization.
- With signs of stabilization, BILL plans to invest more aggressively, targeting four key areas: expanding its value proposition (e.g., card usage and international payments), engaging suppliers, deepening account relationships, and strengthening its ecosystem. This will involve hiring additional staff for R&D and go-to-market teams.
- Consequently, BILL's FY25 adjusted EPS guidance fell short of expectations, projected at $1.36-1.61, a 35% drop year-over-year at the midpoint. FY25 revenue guidance also missed estimates, targeting $1.415-1.450 billion.
In an uncertain economic environment, investors are hesitant about BILL's new strategic investments. The company believes these investments will drive core revenue growth of 20% or more in FY26, with increased profitability. However, the market may need proof of this growth before aligning with BILL's optimism. Until then, shares may continue to struggle.
